Unreimbursed business expense

mjk

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I have a client who is a broker employee in a large incorporated company. He is also a passive minor partner in the parent company. His W-2 wages are over $300,000. His K-1 income is about $3,000. He has about $15,000 of unreimbursed business expenses. I have reported those expenses on Schedule A subject to the 2% limitation. He is also in the AMT. He advised me that other brokers are deducting those business expenses against their K-1 up to the K-1 income. The unused expenses are carried forward. His expenses are directly related to his w-2 income. It seems to me that expenses are allocated to an activity that has nothing to do with the generation of income just to avoid lost deductions. Has anyone ever come up with a situation like this or can provide me with references on this subject? Thank you.
 

Samir

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I think you're on the right track. If those expenses were to be reimbursed, they would be part of the parent company's financials. And if they aren't okay being expensed there, they definitely won't be against his k1 income.
 
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